Using Nigeria’s oil to diversify the national economy

Reviving Nigeria’s Natural Wealth: Reform in the mining industry

 

Nigeria is known for it’s vast natural wealth, with majority of the country’s foreign exchange income and government revenue stemming from oil. With the recent announcement that Africa’s wealthiest man, Aliko Dangote, has signed a deal to finance the building of Africa’s largest oil refinery in Nigeria, all eyes are on the region’s mining sector.

In the 1970’s Nigeria was a major producer of coal, tin and columbite, however, activities in this sector nose-dived considerably when crude oil production began to take the center stage. In recent years, the country has been on a drive to revive the mining sector as a multi-faceted contributor to GDP.

Key minerals identified for priority development

The Nigerian Minerals and Mining Act was established in 2007, as a means to do just this. It represented a renewed national focus and a strategy to evolve the industry.  As part of the reform, 7 key minerals have been identified for priority development:

  • Coal
  • Bitumen
  • Limestone
  • Iron Ore
  • Barites
  • Gold
  • Lead/Zinc

Challenges facing the Nigerian mining sector

The desire for reform in the mining industry is not without it’s challenges. We have identified four of the major challenges facing industry progress:

  • Project Funding:  Multinational corporations have been reluctant to fund major mining projects in Nigeria as a result of the long period of inactivity, and the slow implementation of the reform agenda in the sector. Recent progress is expected to stimulate activities by new investors in the sector
  • Infrastructure development: As experienced in many African countries, the infrastructure deficit presents a significant challenge to progress and reform. In Nigeria, this deficit includes inadequate electricity supply, and access roads to sites of mineral deposits.
  • Security:  The Federal Government security agencies are equipped to respond appropriately to social conflicts as and when they arise. Security concerns are, therefore, not of the magnitude that should discourage investors in the Nigerian mining sector. However, investors are well advised to have a robust corporate social responsibility programme to address the needs of their host communities.
  • Illegal mining and community challenges: There are pockets of Illegal mining activities in some of the regions, with the attendant risks and community challenges. However, with the enactment of the Mining Act, foreign investors with the necessary permits and licences are guaranteed unfettered operation of their legitimate business in the country.

In order to see the reform come to fruition, the Nigerian government needs to sustain their commitment. The progress has been slow to date, and it is estimated that it will take several years before any of the benefits are truly tangible. Fostering an environment of transparency and accountability will go a long way to appease foreign investor concerns.

For the full overview of the Nigerian mining sector, we invite you to download our report.

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About Femi Oke

Relentless passion for creativity and digital acumen to help a professional services firm thrive in the digital space. Femi is an individual with a rich experience on regional African knowledge, its diverse business culture and he understands the continent’s economic drive. He thrives on selfless service and lasting mutually beneficial relationships with colleagues and especially clients encountered in the course of his duties. He is creative, practical and self-motivated with business judgement in corporate, brand and strategic communications, social, digital & traditional media and executive profiling. Roles in the firm include New Media, Digital Communication, Corporate Communication, executive profiling and Brand Management execution. Working on the multi-million dollar Africa high growth market project stands out for femi; besides this, managing all KPMG’s digital communication for the World Economic Forum on Africa is another project that gives him great delight. Femi holds a Masters Degree in Global Marketing from the University of Liverpool.

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One Response to Reviving Nigeria’s Natural Wealth: Reform in the mining industry

  1. This document is highly good for knowledge promotion. Thanks. February 2, 2014 at 10:46 pm #

    highly good work!

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